What Determines Car Insurance Premiums?

Ever wondered how the car insurance companies determine your premiums? Well, if you haven’t then you surely haven’t parted with your hard-earned cash just to protect yourself against an accident. Actuaries, yes, those people who spend their entire lives crunching numbers about the risks we as car insurance buyers pose tell us the following about your premiums.


Vehicle Type


Do you drive a small, I-just-go-from-A-to-B kind of car, or do you drive a mean machine that’s so fast it’ll go from A to Z and skip everything else? The type of your vehicle matters in determining your car insurance premiums. High performance cars can require you to pay higher premiums than an everyday type of car that’s not really worth showing off. Also, luxury cars, and cars that are highly targeted by bad guys who hijack and steal them also take a a little bit more to insure.


Give Us Your Address


Location, location, location is what you often here real estate agents point out about what determines the value of property, this is also true for your car insurance premiums. If your neighbourhood has a high crime rate, then expect to pay more on your policy. Conversely, a secure neighbourhood commands less out of your pocket because of the lessened risks to your vehicle being stolen or hijacked.


Driving Experience


Be a good driver, you know you want to. This record will stay with you and affect your premiums. What we mean by a good driver is someone with experience in driving. Quite often if you take out insurance for your vehicle immediately after earning your Driver’s License, then you will definitely pay a higher premium than someone who has had his or hers for much longer. This is why it’s always a great idea to get your license when you are young; way before even buying your own car.


Arrive Alive


Of course we all think the metros have something against us when they give us hefty fines, or a camera caught your F1 driving skills on a photo and a speeding ticket lands on your doorstep. However, we always recommend driving safely and paying what’s due. A record of your convictions, or lack off indicates what kind of driver you are to the insurer. The more fines you have, the more likely your premiums will go up, and vice versa.


Your Job


People who use their cars solely for going to and from work, and from home to the mall for example tend to pay less. However, if at work you use your car to travel for work purposes of course, you have a higher probability of being in a collision, etc. Thus, you will pay more for your car. This also weighs highly for business owners seeking insurance.


Age, Gender and Family


It’s nice being young but young people are seen as being riskier than say a 40-year-old who is settled at work, goes out less and has a family to look after. And for women, man it’s nice being you. After years of checking out how often female drivers claim, the car insurance companies deduced that you’re simply safer drivers than men. Because of this, by virtue of you being a female you qualify for less monthly premiums on your car insurance quote. Couples who take out insurance, have children and are settled down in a family are seen as more responsible than they would being single. Car insurance buyers who have families to support are at an advantage because than can sometimes lower their premiums.


Claims History


If you are changing insurers on the same car or different car, your No Claims Bonus will come in handy because it indicates that you are a safe driver and can be trusted with your car.


Type of Cover


There are three main types of car insurance covers in South Africa, 1) comprehensive cover, 2) fire, hijacking and third party cover, and 3) just third party cover. Given your needs, your car, what you can afford, and all the other determining factors, you will need to asses what’s the best car insurance quote you should go for. Don’t take comprehensive cover if you know you will not need it, but do so if you think you do. What we always say is best to have some sort of car insurance than none at all. Getting the right type of cover is also important for when you need a loan to finance a car purchase, where before the vehicle finance company, dealer or bank, will need you to also take out insurance.


The Insurer


Car insurance companies come in many different flavours, some cater solely to women, and others to risky young people. Each of these has their own way to determine car insurance premiums, prioritizing some things and giving little regard to others. You visit some of our partner insurance companies if you would like to get a quote.